Hong Kong shares retreated from early an gain, edging downwards in subdued trade led by China Construction Bank, but the Hang Seng Index managed to gain momentum later in the day closing up 1.12 percent.

Still traders mostly stayed away ahead of the holiday period and on concern over further measures from the Chinese authorities to curb property market speculation.

Market debutant China Pacific Insurance, China's third-largest life insurer, topped the most heavily traded list as it struggled to hold above its issue price following a $3.1 billion IPO -- the world's seventh-largest IPO this year.

The insurer slid as to as low as HK$27.50 before recovering to HK$28.40 at midday, up 1.4 percent from its issue price of HK$28.

Australian stocks rose 0.75 percent to a three-week closing high on Wednesday, driven up banks, while Gloucester Coal surged after a takeover offer from Macarthur Coal.

Companies with heavy U.S. exposure, such as shopping mall owner Westfield Group and James Hardie, also gained on hopes of a steady recovery in the world's biggest economy.

The benchmark S&P/ASX 200 index added 35.05 points to 4,739.30, based on the latest available data, its highest close since Dec. 3. The gains come on top of a 1.5 percent rise on Tuesday.

The market is scheduled to close at 0310 GMT on Thursday, two hours ahead of its usual closing time. Regular trading will resume after the Christmas break on Dec. 29.

Shares in Green Cross, the sole domestic manufacturer of H1N1 vaccine, rose 3.08 percent after the firm told the Korea Exchange it had won an order for the vaccine worth 152.5 billion won ($129.3 million) from the government.